SESSION HIGHLIGHTS, MAR 14-18, 2016
March Revenue Forecast Presented to JBC
The Joint Budget Committee (JBC) spent the late morning of March 16 reviewing the state’s somber quarterly economic outlook. According to the Office of Legislative Legal Services (SLLS) and the Governor Office of State Planning and Budgeting (OSPB), the Colorado economy continues to grow, but at a pace slower than population growth; both agreeing that this situation pushes Taxpayer Bill of Rights (TABOR) refunds out for one year, but disagreeing about the rate of the “negative growth” pattern and how that will affect the SB09-228 transfers for capital construction and transportation.
Chairwoman Mille Hamner (D-Summit County) first welcomed Natalie Mullis, OLLS Chief Economist. Expectations for General Fund (GF) revenue available to the budget decreased from the December revenue forecast by $26.9 million for FY2015-16 and $89.9 million for FY 2016-17. This means that for the current budget year (FY2015-16) GF revenue is expected to be just over $111 million short for the amount needed to fund the statutorily required-reserve. The slowdown in growth can be attributed to a struggling global economy which has left agricultural, manufacturing and energy profits low. But because the slowdown prevented a TABOR refund scenario and because Colorado’s personal income increased by 6.2% in 2014, the first of the five-year block of transfers from SB09-228 was triggered in FY2015-16.
There is a provision in SB09-228 that says: if during any particular year the state incurs a large enough TABOR surplus, transfers would either be cut in half or be eliminated for that year. The transfers are cut in half if the TABOR surplus during that year is between 1.0 percent and 3.0 percent of GF revenue, and eliminated if the surplus exceeds 3.0 percent of GF revenue. This provision highlights that the projections from OLLS and OSPB were not absolutely aligned. OLLS suggested to the JBC that the transfer for this year and next year should be whole, close to $200 million, annually and the following year should be cut in half; and OSPB suggested that all SB09-228 transfers should be full for FY2015-16, cut in half FY2016-17 and be zero in FY2017-18. OSPB, under the direction of Henry Sobanet, also predicted that the current year’s GF shortfall will be $98.1 million.
No matter which projection the members on the JBC decide to go with, they will have to start adjusting spending for the current year downward to account for the current year’s $98.1-$111.2 million dollar shortfall. Plus leaders in the parties need to start planning for future economic risks because although Colorado’s economy has been resilient during the deep retrenchment in oil and gas activity so far, continued weakness in the industry may have larger adverse impacts on economic activity for the state.
House Democrats Continue Anti-Oil and Gas Agenda
The first of two bills that have been introduced this year which make major amendments to state law regarding oil and gas development, HB16-1310, passed this morning by Rep. Joe Salazar (D-Thornton). The second-term Democrat held the support of most of his caucus and passed his bill out of the House on vote of 33-31-0. Rep. Salazar claims the bill will hold oil and gas drillers liable for any earthquakes they supposedly cause.
Initially, HB16-1310 attached the concept of “strict liability” to the production of oil and gas. In tort law, “strict liability” is an imposition of liability on a party without a finding of fault. In that case, the claimant would only need to prove that an act occurred and then the defendant would be legally responsible. This would mean that oil and gas companies are inherently dangerous and that no longer would being in compliance with regulations be the defense against claims of negligence for damages. The bill was amended during the floor debate, replacing “strict liability” with “highest standard of care.” The meaning of that term would have to be litigated to determine the degree to which regulatory compliance would be considered a defense. If passed, this bill would add to the regulatory uncertainty in the state. Opponents of the bill maintain that the bill has no basis in reality and serves only to embolden the opponents of development. They also suggest that this type of bill passing would make Colorado look like a poor place to invest and do business.
The second of the two anti-oil and gas bills, HB16-1355, sponsored by Rep. Mike Foote (D-Lafayette), increases local government regulation and creates a duel regulatory system for oil and gas siting in Colorado. The bill realigns “1041 powers” to give local governments land use authority for oil and gas siting decisions. This is in direct conflict with the exclusive siting authority now granted to the state.
Said one state official recently, “Because the state’s authority is not repealed it would certainly make the siting of oil and gas facilities more complex.” The bill goes on to say that “nothing impairs or negates the authority of local governments to regulate the siting of oil and gas facilities.”
The bill would undo or make irrelevant thirty years of case law and all of the state’s regulatory regime giving local governments’ rights and responsibilities to participate in the state’s extensive siting processes. This bill has been assigned to the House State Affairs committee where it will most certainly pass; a vigorous debate on the House floor is expected.
Three Ballot Measures Introduced Could Change Election Maps
Voting rights activists displeased with a ballot question that would change the way Colorado draws up maps for state legislative districts and US House seats have now offered up two new ballot measures of their own.
Supporters say the competing reforms are aimed at ending the fight that happens every 10 years over the boundaries for legislative districts, usually ending with court. The way populations that are drawn into districts can give an advantage to one party over the other based on demographics and historic voter performance.
Initiative 122 would create a commission to redraw congressional districts and Initiative 123 would establish a separate commission to shape legislative districts after every 10-year census.
Recently filed, the measures present a direct challenge to another ballot measure, Initiative 107. This was announced in November, and would create a 12-member commission of four Democratic appointees, four Republican and four members from minor parties or have been unaffiliated from a major party for at least one year. The 107-commission would handle both congressional and legislative boundaries.
Initiatives 122 and 123 would both feature nine-member commissions that would each include three appointed Democrats, three Republicans and three unaffiliated members.
County Highway Measure Advances
A bill that would allow counties to retain access control over four lane highways they build passed through the House this week on a bipartisan vote of 60-4-1.
HB16-1155 precedes a new class of highway, the first of which will be built in Weld County by Weld County to connect US Highway 34, east of Greeley, to Interstate 76, near Hudson. This highway should help remove congestion on US 85 and Interstate 25. The County has reserved about $140 million of their funds to construct this road which is part of the Northern Colorado Transportation plan which involves state and local highway improvements. It will follow County Road 49 which is now a two-lane North-South road. Construction is scheduled to begin in 2016. The Senate is expected to hear this bill in the next two weeks.